Here’s a letter to National Review:
Scott Lincicome’s criticism of Wells King’s and Dan Vaughn’s purported demonstration of the success of the voluntary export restraints (VERs) that Pres. Reagan unwisely pressured Japanese automakers to adopt in 1981 is devastating (Letters, November 7). In contrast, King’s response to Lincicome’s criticism is as lame as is King’s and Vaughn’s fallacy-filled original essay.
Overlook King’s commission of the post hoc, ergo propter hoc fallacy. Focus instead on his continued sidestepping of the fundamental criticism of protectionism, namely, even if – indeed, especially if – it successfully buoys some particular industries, protectionism necessarily imposes larger costs on the rest of the home-country economy.
Protectionism’s harm to consumers is obvious. Having to pay more to buy the outputs of ‘successfully’ protected firms, consumers must reduce their purchases of other goods and services or reduce their savings. To grasp this economic reality is to realize also the harm that protectionism inflicts on other home-country firms and workers. Every input that protectionism diverts into protected firms is an input diverted away from other productive uses. Non-protected firms thus have less access to raw materials, tools, intermediate goods, and labor. Their outputs fall. Further, because workers in non-protected firms have fewer or lower-quality tools and inputs with which to work, these workers’ productivity falls. And falling productivity means falling wages.
Looking only at the alleged ‘success’ of protected firms and then confidently concluding that protectionism is a boon to the entire country, King reasons as would an apologist for successful thieves – an apologist who points to the thieves’ bustling business in larceny, and to the thieves’ high ‘earnings,’ and then confidently concludes that thievery is a boon to the entire country.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030